- Supreme Court of Singapore
- BXH v BXI
LONG-TERM CONTRACTS - DISTRIBUTION AGREEMENT - BETWEEN AN HONG KONG DISTRIBUTOR AND A SINGAPOREAN MANUFACTURER - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET OR SUPPLEMENT APPLICABLE DOMESTIC LAW ( SINGAPOREAN LAW)
ASSIGNMENT OF RIGHTS - NOTICE TO THE OBLIGOR - MAY BE PROVIDED BY EITHER THE ASSIGNOR OR THE ASSIGNEE - OBLIGOR'S RIGHT TO REQUEST ADEQUATE PROOF OF ASSIGNMENT WHEN IT RECEIVES NOTICE FROM THE PURPORTED ASSIGNEE - REFERENCE TO ART. 9.1.12(1) UNIDROIT PRINCIPLES TOGETHER WITH PECL AND DCFR
Claimant, an Hong Kong company, entered into a distribution agreement with a Singaporean company (“the Parent Company”), which contained an arbitration clause. After 3 years, the Parent Company transferred its rights and obligations under the contract to Respondent, its wholly-owned subsidiary based in Hong Kong, through an assignment and novation agreement.
Respondent issued a notice of arbitration to Claimant, seeking payment of some debts deriving from the distribution agreement. Claimant resisted the claim on various grounds, including that the arbitral tribunal did not have jurisdiction to hear the dispute, since the right to arbitrate under the distribution agreement remained with the Parent Company absent a valid notice to the obligor, as required by the assignment and novation agreement. In particular, the notice was improperly given by the Parent Company (the assignee) instead of the Respondent (the assignor). The arbitral tribunal dismissed Claimant’s challenge and issued its award, finding in favour of Respondent on both jurisdiction and the merits of the defendant’s substantive claim. Claimant challenged the award before the Singapore courts.
The Court of first instance found that the arbitral tribunal had jurisdiction over the parties’ dispute, since the arbitration agreement contained in the distribution agreement applies also to Claimant.
The Court of Appeal partially review the first instance decision, but confirmed the part relating to the notice of the assignment. According to the Court, both Singapore and English case law suggest that valid notice may be provided by either the assignor or the assignee and, in support of that interpretation, the Court quoted Art. 9.1.12(1) of the UNIDROIT Principles 2016, together with Art. 11.303(2) PECL 2002 and Art. III-5:120 of the Draft Common Frame of Reference. The obligor in turn has the right to request for evidence of the assignment when it receives notice from the purported assignee. Assignees may therefore take steps to protect their assigned interests by providing the relevant notice(s) without having to wait for the assignor to do so.